Has business blackballed the yakuza? Don’t bank on it

The Financial Services Agency (FSA) publicly spanked Mizuho Bank last month by slapping it with a “business improvement order” for letting Japan’s organized crime groups use its facilities. At least $2 million in illegal transactions were cited.

Mizuho had been warned about the same thing in 2010 but didn’t do anything.

It is quite a scandal. Even the venerable Nikkei Shimbun scolded Mizuho.

Shocking. Appalling.

But links between Mizuho and the mob date back longer than that. In February 2006, an executive in the bank’s business inspection department was arrested and confessed to having sold data on more than 1,250 customers to a yakuza front company. It was his department that was supposed to investigate and weed out yakuza clients, not sell them information.

Oops.

To be fair, though, despite Mizuho’s sordid history with yakuza finance, it was Citibank that used to be known in the underworld as 893 Ginko (893 Bank), since 893 can be read in Japanese as “yakuza.” The term comes from a losing hand in Japanese cards; many yakuza groups were originally federations of gamblers. Gamblers like banks.

In 2009, the FSA ordered Citibank Japan to suspend its retail banking operations for a month after they found its system for monitoring crime syndicates and other antisocial organizations was not being updated. In addition, Citibank Japan was revealed as having maintained several hundred accounts for people affiliated with “antisocial groups” including yakuza bosses.

Yeah, that was when we really knew the mob was non grata in the financial sector.

Sorry, I forget: 2009 was the second time Citibank had been sanctioned. For similar reasons, its private banking division was closed down in 2004. Among its clients then was Saburo Takeshita, a notorious financier for the Yamaguchi-gumi, Japan’s largest crime group.

However, Citibank has cleaned up its act these days. Of course it helped that, in February 2012, the U.S. Treasury Department imposed sanctions on the Yamaguchi-gumi. The smarter gangsters all closed their remaining Citibank accounts immediately — some even before the announcement. (Go figure.)

If the goal of the sanctions was to get yakuza money out of the U.S. economy or any U.S. connected financial entity, it seems to have had an impact.

But back to the Mizuho Bank and that business improvement order — a measure whose timing was probably not random. In fact, it was likely the government’s way of celebrating Oct. 1, 2013 — the second anniversary of the Organized Crime Exclusionary Ordinances (OCEOs) going national in Japan. From then, it essentially became a crime to pay off the yakuza or share any profits with them.

The results have been significant and the FSA would have timed things to remind people of that.

A somewhat unexpected side effect of the OCEOs has been to largely drive individual yakuza — not just the mobs’ business — out of local banks, because almost every banking contract in Japan now has an “ordinary crime exclusionary clause” (OCEC).

That simple but effective provision was the brainchild of an anti-yakuza crusader, the late Toshiro Igari. A former prosecutor, Igari came up with the idea after consultations with the Westin Hotel in Tokyo, which had had serious problems getting a senior gang boss named Tadamasa Goto to kindly vacate their premises after he had checked in. In fact the hotel found it had no legal grounds on which to kick him out — until Igari thought of a way to ensure such problems would henceforth be avoided.

Now included in many contracts, the clause requires signatories to affirm they are not members of any “antisocial forces” — aka yakuza. If they are, but sign anyway, not only can the institution unilaterally invalidate the contract — but yakuza members can be (and now often are) arrested for fraud.

Consequently, readily visible yakuza — those with tattoos and/or missing fingers — are now finding themselves unable to maintain a savings account or even rent an apartment. The magic cocktail of OCEOs, OCECs — and more stringent national anti-organized crime laws — have squeezed the yakuza harder than 1,000 arrests.

In fact by 2013, the mobs’ membership, which had hovered around 80,000 for 16 years, was down to roughly 63,000 according to National Police Agency data. One group, the Kyushu Seido-kai, even disbanded this year, leaving only 21 designated organized crime groups out there.

However, the Democratic Party of Japan, which was ousted from power in a landslide last December, had the open backing of two major crime groups, as I’ve written before. Indeed, its Minister of Justice, Keishu Tanaka, even had to resign because of his alleged ties to the Inagawa-kai crime group.

But the bold actions of the FSA should let everyone know the game has changed. Doing business with the yakuza at any level will no longer be tolerated. There’s a new sheriff in town, and he’s as clean as they come; he’s Prime Minister Shinzo Abe of the now-ruling Liberal Democratic Party.

Okay, there was that picture of him with Icchu Nagamoto, a Yamaguchi-gumi financier, published in the Shukan Post news weekly last year — but Mr. Clean said he didn’t really know him.

And it was also reported that, after visiting the Fukushima No. 1 nuclear power plant’s disaster zone on the 19th of last month, Abe had a covert meeting with the head of a major entertainment firm who is under investigation for organized crime ties.

But hey, in order to root out the bad guys you have to know who they are. Right?

So now it’s a new day in Japan. With Tokyo chosen to host the 2020 Olympics, the police are definitely feeling an impetus to remove the yakuza from public view. In addition, a movement to make casinos legal in Japan is also bad news for the yakuza, since illegal gambling is one traditional source of their income. However, the government will try to make sure the cops and politicians, not the yakuza, run the new legal racket. So the push is on.

Yep. There’s a new sheriff, heat from the police, moves to cut the yakuza off from gambling money — and to kick them out of the financial sector as well. This time it looks to be curtains for the tattooed gangsters of old. But I don’t think I’d bet on it.